ACTG 2011 Lecture Notes - Lecture 9: Book Value
Document Summary
Selling their business - based on net income before tax. Therefore they have an incentive to increase net income. There is commercial substance so both are benefiting, contract has been approved, customer has agreed to receive early delivery, collection is assured since it has not been an issue which was stated. We know the transaction price of million. 98% of 4000000 = 3920000 fob destination record at dec 31 2017. Estimate pant would be generating million of net revenue each year. June 2017 - estimate generating million of revenue each year. Annual depreciation expense = 12500000 (purchase price /10) We dismiss the fair value because the value in use is significantly higher. Carrying amount (93750000) less value in use (42000000 = 51750000. Record depreciation for first half of the year. Purchase price is 724 975: getting loan to purchase asset.
